NZ Banks tighten LVRs to cool pricing

Interesting approach by the NZ Reserve Bank, a dangerous one to apply to Australia where affordability is already a serious issue. While the residential market is generally strong, Sydney's outperformance is seen as the exception. I can't see how restrictions implemented on a regional basis can practically be applied. Surely the market can be relied on to correct without bank intervention and the banks can manage their own risk through internal policy?

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Australian regulators could be keeping a close eye on New Zealand after new investor rules were introduced by its central bank to combat a “growing housing market risk”.
The changes apply specifically to Auckland, which has been experiencing a Sydney-like boom.
The Reserve Bank of New Zealand has announced that residential property investors in the Auckland Council area will need deposits of at least 30 per cent from 1 October.
This has been done “in response to the growing housing market risk in Auckland”, although the Reserve Bank said that New Zealand’s financial system remains sound.
“The objective of this policy is to promote financial stability by reducing the rate of increase in Auckland house prices and to improve the resilience of the banking system to a potential downturn in the Auckland housing market,”